Delta777Jet
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LOT In Trouble?

Sat Jul 07, 2012 9:58 pm

Today was the opening ceremony of the new Low Cost airport near to Warsaw, Warsaw-Modlin airport.
Wizz Air will move its entire operation to Modlin and Ryanair will open many routes. Additionally there is the new OLT Express competing very strong on domestic and from October also on European routes, flying directly from Warsaw's main airport. From next year on Emirates will start to kick them on the East routes.


Will LOT be able to survive this pressure ?
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kl911
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RE: LOT In Trouble?

Sat Jul 07, 2012 10:03 pm

Ryanair and Wizzair have different kind of pax. Pax who would have never flown at all if prices are not low enough. Doubt that LOT is at risk from them. BA for example has Easyjet, Ryanair and Wizzair at London and survives.
 
Cubsrule
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RE: LOT In Trouble?

Sat Jul 07, 2012 10:07 pm

Quoting Delta777Jet (Thread starter):
From next year on Emirates will start to kick them on the East routes.

I missed LO's flights to DEL, BLR, MCT, and KHI. EK isn't really competing for Europe-PEK traffic.

LO has problems. EK isn't one of them.
I can't decide whether I miss the tulip or the bowling shoe more
 
JU068
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RE: LOT In Trouble?

Sat Jul 07, 2012 10:31 pm

It will be difficult for LOT to compete against these other airlines but they do have some advantages over their competition. Most importantly WAW is three times closer to the city than Modlin is. LOT has a great onboard product and they operate a modern fleet with decent connections to all parts of Europe.
Just recently they considered axing their Belgrade flights but after implementing a new approach to the market things changed dramatically. This goes to prove that LOT has what numerous carriers lack today: a competent management.

I wonder if the new Modlin airport will have some impact on Lodz airport. After all it seems to me that the two airports are not that far.

If anything, it is nice to see OLT Express making things much more interesting in the Polish aviation market.
 
mdavies06
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RE: LOT In Trouble?

Sat Jul 07, 2012 11:27 pm

Quoting kl911 (Reply 1):
Ryanair and Wizzair have different kind of pax. Pax who would have never flown at all if prices are not low enough. Doubt that LOT is at risk from them. BA for example has Easyjet, Ryanair and Wizzair at London and survives.

BA actually would have closed down long ago had BA not been benefitting from its long haul operations, particularly its NA routes. BA was losing money on its short haul network for years in the 2010s.
 
BestWestern
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RE: LOT In Trouble?

Sun Jul 08, 2012 2:39 am

LO is in trouble. This different type of passenger argument isn't valid. The same can be said for Malev and CSA and all the other European flag carriers, whose home markets are low yield.

Whilst our friends in Wizz and Ryan will grow the market dramatically, a considerable proportion of the new LCC growth will come from LOT - and will impact both their yields and loads. Whilst LOT will be able to command a yield premium, their cost disadvantage is even greater.

Competent management at LOT commenced services to Hanoi, so unsure if they are really that bright afterall.

EK will compete for eastbound passengers, and make their putative Beijng services even more loss making.

LO fleet isn't in too bad a shape - their E jets are fuel efficient. The 787 order was a folly.
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EY460
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RE: LOT In Trouble?

Sun Jul 08, 2012 5:35 am

Quoting kl911 (Reply 1):

The same could have been said for MALEV. And we all know how it ended.
 
JU068
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RE: LOT In Trouble?

Sun Jul 08, 2012 7:07 am

Quoting bestwestern (Reply 5):
LO is in trouble. This different type of passenger argument isn't valid. The same can be said for Malev and CSA and all the other European flag carriers, whose home markets are low yield.

The problem with Eastern European carriers is not so much that their market is low yielding but that they have not adapted to the change in their operating environment, that is from a protected to a liberal one. But decades of ineffective economic planning had destroyed any form of competence among the 'political elite' which would not know what competition is, even less how to fight it. Until that political elite is replaced with the newer generation things will be difficult.
Without adequate reform these carriers could not compete effectively against new airlines in their market.
All of the ex-communist countries had their airlines as a system for employing the children of the 'revolutionary heroes'.

Malev's problem was that the current CEO of Wizz Air signed a detrimental fleet renewal which ensured that Malev could never make a profit. This was the real reason for Malev's collapse, their slow death began the moment they started advertizing their youngest fleet in Europe.

On the other hand LOT is the only carrier in Eastern Europe to successfully maintain long-haul flights. As for Hanoi, those flights had the loads but not the yields. In other words LOT's management sensed that there was a market and they entered it but left it soon after because the yields did not live to their expectations. Calling LOT's management 'not smart' is unfair because this happens to all airlines.

I am confident LOT will be just fine because they are the only post-communist airline to show signs of good management.
 
marky
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RE: LOT In Trouble?

Sun Jul 08, 2012 7:42 am

Is LOT in trouble?

I'd suggest that long term virtually every European full service carrier that isn't part of IAG, Lufthansa Group or AF-KLM is probably in trouble......
 
kl911
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RE: LOT In Trouble?

Sun Jul 08, 2012 8:59 am

Quoting EY460 (Reply 6):
The same could have been said for MALEV. And we all know how it ended.

MALEV was killed by its management and the government. Ryanair wasnt even at BUD untill malev collapsed.
 
JU068
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RE: LOT In Trouble?

Sun Jul 08, 2012 10:56 am

Quoting kl911 (Reply 9):

Well that is not true, Ryanair left Budapest because of an argument over the prices while Malev was still around. Though Malev did not have to deal with Ryanair they had to deal with Wizz Air which made their life much more difficult.
 
Cubsrule
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RE: LOT In Trouble?

Sun Jul 08, 2012 2:40 pm

Quoting bestwestern (Reply 5):
EK will compete for eastbound passengers, and make their putative Beijng services even more loss making.

I know EK has a nice onboard product, but why would anyone fly 2000 miles out of their way when it would be far easier to connect at any number of places in Europe if one does not wish to fly LO?
I can't decide whether I miss the tulip or the bowling shoe more
 
hoya
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RE: LOT In Trouble?

Sun Jul 08, 2012 2:43 pm

Quoting bestwestern (Reply 5):
Competent management at LOT commenced services to Hanoi, so unsure if they are really that bright afterall.
Quoting ju068 (Reply 7):
On the other hand LOT is the only carrier in Eastern Europe to successfully maintain long-haul flights. As for Hanoi, those flights had the loads but not the yields. In other words LOT's management sensed that there was a market and they entered it but left it soon after because the yields did not live to their expectations. Calling LOT's management 'not smart' is unfair because this happens to all airlines.

I got the feeling the Hanoi flights were axed because LO needed a plane to fly to PEK. After all, Poland has a very large Vietnamese community - admittedly that probably meant lots of VFR traffic, but at least that was a source of customers.

Modlin's problem is that it's far from the city center. Business travelers will not drive that far. WAW is close to the city center, and has great public transportation links, particularly after the train station opened. EK believes there is a large enough business market to warrant a 3-class daily flight out of WAW. LO is better able to capture that higher-yielding traffic at WAW, unlike Wizz or Ryanair out at Modlin. LO also seemed to be doing well even though it was competing with Wizz at WAW. Now that competition will be gone.

As for OLT Express, they already have received bad press due to their old ATRs breaking down. Additionally, they're flooding the market with too much capacity, and their business plan doesn't make sense in the long-term. Once Poland's roads and railways are upgraded, flying domestically will make little sense. There's a reason LO mostly flies its E-Jets and K2's turboprops domestically. If anyone is a casualty of Modlin, it will be OLT.
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raaadek
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RE: LOT In Trouble?

Sun Jul 08, 2012 2:55 pm

Interesting question. From my own experience - I am a 'price sensitive, low yield' passenger and travel frequently on the LON-WAW route. Before OLT started operations and Modlin opened there were 3 options LO, BA, W6 - all flying into WAW. Most of my trips in the last 3 years were on LO. That was because I could get a return ticket with LO for £60-80 and Wizzair, being the only LCC at WAW had little incentive to lower their fares - they were usually at the same level as LOT and often more expensive. Now, my next 4 trips are 2xW6, OLT and LO. The price war between FR and W6 had already started and you can get a RT for as little as £15 from WMI. This means that LO won't be getting my £70 any time soon, the question is - will they miss it? Can they even make profit on that fare.
BTW. In my opinion W6 moving from WAW to WMI was not a smart move. They knew in advance that FR will be flying from WMI as well and at the moment they go head to head on almost all their routes from WMI. Can W6 compete with FR? MO'L has already said that their tickets from WMI will always be cheaper than W6, even if it means selling them for 1p. Comparing the size and bank accounts of the 2 airlines has W6 any hope? Would't it be smarter to stay at WAW. How much more expensive is it to fly from WAW vs. WMI? £5, £10 per sector, per head? Many people would be glad to pay the difference and fly from WAW. As it is, if the price is the same from WMI I'd always choose FR because they are simply better and more reliable in my view. Sorry for drifting off topic.
 
JU068
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RE: LOT In Trouble?

Sun Jul 08, 2012 3:18 pm

Does anyone know how much does it cost to reach the city from Modlin? Also how long is the ride?
 
Jarek
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RE: LOT In Trouble?

Sun Jul 08, 2012 4:38 pm

Quoting ju068 (Reply 14):
Does anyone know how much does it cost to reach the city from Modlin? Also how long is the ride?

About 15 PLN for the bus and train ride and it would take about 1 hour 20 minutes.
99 PLN for the taxi ride. That would be about 30 minutes I guess.

[Edited 2012-07-08 09:38:43]
 
JU068
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RE: LOT In Trouble?

Sun Jul 08, 2012 4:50 pm

Quoting Jarek (Reply 15):

About 15 PLN for the bus and train ride and it would take about 1 hour 20 minutes.
99 PLN for the taxi ride. That would be about 30 minutes I guess.

Wow!! 01:30 for the ride to the city?? I do not see many people opting for this unless there is a huge difference in price. Thanks for the info.
 
dcaviation
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RE: LOT In Trouble?

Sun Jul 08, 2012 4:51 pm

Quoting Jarek (Reply 15):
99 PLN for the taxi ride. That would be about 30 minutes I guess.

How far is Modlin from Central Station?
WAW is about 11km and I'm yet to pay for taxi less then 50 PLN.
 
Jarek
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RE: LOT In Trouble?

Sun Jul 08, 2012 6:17 pm

Modlin is outside of the city. About 35 km

See here (in Polish)
http://www.modlinairport.pl/site/%EF%BB%BFdojazd%20na%20lotnisko
 
JeffinMass
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RE: LOT In Trouble?

Sun Jul 08, 2012 8:18 pm

Didn't Turkish Airlines purchase controlling interest in LOT recently?
 
B777LRF
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RE: LOT In Trouble?

Sun Jul 08, 2012 8:52 pm

Quoting JeffinMass (Reply 19):
Didn't Turkish Airlines purchase controlling interest in LOT recently?

Nope, they backed out before a deal was even close to being made. Besides, there's a problem when a company from a non-EU country acquires more than 49%. Basically that would result in the carrier loosing it's "EU" status.
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Buyantukhaa
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RE: LOT In Trouble?

Mon Jul 09, 2012 8:03 am

Quoting hoya (Reply 12):
I got the feeling the Hanoi flights were axed because LO needed a plane to fly to PEK.

Correct.

Quoting hoya (Reply 12):
Once Poland's roads and railways are upgraded, flying domestically will make little sense.

Well, don't underestimate the distances - GDN-KRK for example would still take you almost 6 hours after all railway upgrades (currently 8-10) so there will always be a market on domestic flights, smaller maybe, but still.
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LOWS
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RE: LOT In Trouble?

Mon Jul 09, 2012 11:08 am

Quoting hoya (Reply 12):
Once Poland's roads and railways are upgraded, flying domestically will make little sense. There's a reason LO mostly flies its E-Jets and K2's turboprops domestically.

And when is that supposed to happen?

I've heard Polish train service is awful, so say the least.
 
eaa3
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RE: LOT In Trouble?

Mon Jul 09, 2012 11:29 am

Quoting B777LRF (Reply 20):
Nope, they backed out before a deal was even close to being made. Besides, there's a problem when a company from a non-EU country acquires more than 49%. Basically that would result in the carrier loosing it's "EU" status.

Are you sure of this. The EU mandates that there are no restrictions on ownership of airlines within the EU but often the contries themselves restrict foreign ownerships from entities from outside the EU. The EU doesn´t get involved in this.
 
JU068
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RE: LOT In Trouble?

Mon Jul 09, 2012 11:34 am

Quoting eaa3 (Reply 23):
Are you sure of this. The EU mandates that there are no restrictions on ownership of airlines within the EU but often the contries themselves restrict foreign ownerships from entities from outside the EU. The EU doesn´t get involved in this.

Turkey is not a member of the European Union hence why there was a problem with ownership. Had TK bought LO it would lose the status of an EU carrier.
 
WROORD
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RE: LOT In Trouble?

Tue Jul 10, 2012 1:38 am

Quoting hoya (Reply 12):
There's a reason LO mostly flies its E-Jets and K2's turboprops domestically.

LO flies with 737 on routes from WAW to GDN and WRO.

Quoting BuyantUkhaa (Reply 21):
Well, don't underestimate the distances - GDN-KRK for example would still take you almost 6 hours after all railway upgrades (currently 8-10) so there will always be a market on domestic flights, smaller maybe, but still.

Exactly, therefore OLT has now 3 x daily A320 on routes from GDN to KRK and WRO. Poland is more less the size of France or Spain, so If domestic flying there makes sense it will in Poland.

Quoting hoya (Reply 12):
I got the feeling the Hanoi flights were axed because LO needed a plane to fly to PEK.

True, otherwise they would lose preferrable slots and a permission to fly over Siberia.
 
BestWestern
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RE: LOT In Trouble?

Wed Jul 11, 2012 12:10 am

Quoting Cubsrule (Reply 11):
I know EK has a nice onboard product, but why would anyone fly 2000 miles out of their way when it would be far easier to connect at any number of places in Europe if one does not wish to fly LO?

Because its cheap and good service.

Quoting hoya (Reply 12):

I got the feeling the Hanoi flights were axed because LO needed a plane to fly to PEK.

Lets get real here - Hanoi was axed because it lost a fortune.
You are 100 times more likely to catch a cold on a flight than an average person!

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